Monday, October 12, 2015

Krugman Jumps on the Latest Nobel Laureate and the "Inequality Problem"

As I suggested in my earlier post, the Nobel Award in economics this year appears to be a curtsey to the egalitarian Thomas Piketty and the new wave of absurd concern about inequality.

I am not seeing this mentioned by other free market and quasi-free market economists, They are focusing on Angus Deaton's comments about the failures of transglobal government organizations in solving poverty. Here Deaton does seem to have a point.

But this is not why Deaton was awarded the Nobel Prize, it was more because of his data collection methods, which, surprise, measure, among other things inequality.

Paul Krugman knows just how to start to advance the understanding of this year's award to Deaton in the direction the Noble Committee was probably thinking (my highlight):

Angus Deaton has won the Nobel, which is wonderful — dogged, careful empirical work at the micro level, tracking and making sense of individual households, their choices, and why they matter...
Anyway, Deaton is also a fine writer with important things to say about political economy. Cardiff Garcia excerpts a passage in which he explains why we should care about the concentration of wealth at the top:
[T]here is a danger that the rapid growth of top incomes can become self-reinforcing through the political access that money can bring. Rules are set not in the public interest but in the interest of the rich, who use those rules to become yet richer and more influential.
To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.
Note well, Krugman is more worried about the concentration of wealth, than the idea that political access can be abused. That is, Krugman, like Piketty would like to focus more on the inequality itself, which can be the result of many types of circumstances, rather than elimination of the power centers that create the potential for abuse by the rich.

Bottom Line: "They" will use Deaton data to justify regulating us all "to fight inequality." The game is rigged.


1 comment:

  1. Agreed. And the suggestion that worries about inequality are due to Deaton's hypothesis that it will effectively result in a self-reinforcing oligarchy is completely absurd. It MAY BE the case that for Deaton, this is why he concerns himself with inequality. But he's a minority. Most folks who obsess over inequality do so either due to envy or due to the perceived political or social advantages.

    I'm a twenty-something. I know plenty of folks (usually near my age) who complain about inequality, businesses, the U.S. relative lack of a social safety net vs. Europe, etc. on a regular basis simply to score social points. Some of them do it simply because they know it improves their chances of meeting someone of the opposite sex. Were someone around to call them out on their embarrassing lack of economic education, this should result in embarrassment for them. But there aren't many folks that understand economics well enough to correct their (lack of) logic.